De Haan on Senior Interest before Subord Principal.mp4
De Haan on Senior Interest before Subord Principal.mp4: Audio automatically transcribed by Sonix
De Haan on Senior Interest before Subord Principal.mp4: this mp4 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.
Av De Haan (Minister):
On behalf of the Minister, that the, uuuuhh heh, the going along of the Enterprise Chamber in that waterfall as outlined by the experts, that there has not been a, uhh, there has not been a substantive legal debate on this particular point. And you did it because experts did it. But we did not have a legal discussion about whether uuuuhhh, whether the post-bankruptcy interest claims of the unsecured creditors should come after the subordinated claims or before the subordinated claims. That's the point we want to make, not one ... I don't think you've made a well-considered judgment on that, considering the arguments that have been put forward.
Judge Makkink:
As a judge you have a bit of a tendency to focus your reasoning on what is under debate. Although we are, of course, entirely obliged to apply the law correctly, even if parties unisono think incorrectly, but...
Av De Haan (Minister):
I understand what you're saying, but you have to determine the amount of compensation independently. Ultimately, it is also a legal question: what does that waterfall look like?
Av De Haan (Minister):
Well then finally about that, Learned Friend Spinath has said yes, that's going to take an awful lot of work, if we still have to go do this. I don't think that's too bad. Learned Friend Soerjatin, and also someone else, I think, said: Yes, you can't do it that non-specifically. You have to look at all those specific euh subordination provisions. Well, we haven't, uh, we've explicitly limited ourselves to one example, because they're all the same. And they are provisions in the issue documentation of bonds that you yourself have already judged should be interpreted objectively. So as far as we are concerned, at least with regard to those bonds, there is no reason at all to go and find out party motives or to start questioning witnesses. You don't have to do that in this compensation procedure. This could possibly be done again in ordinary civil proceedings. But then that is, and we end up in such a discussion with Stichting Beheer [holder of the Core Tier 1 Stichting Securities]: what the meaning of such an opinion is. You can make that decision yourself. You already did, for example with regard to the Stichting Securities.
Judge Makkink:
Also that, if I understand you correctly, in essence your argument is a factual argument, more than a legal argument. Namely, you say, the interpretation of these provisions: this is what the parties have agreed, that in essence your argument. The agreement, as it is laid out in the subordination provision, that agreement means that the [unsubordinated] interest claims post bankruptcy have priority over this [subordinated] claim. That's essentially the argument, isn't it? Not that it follows from the law, simply because it's a subordination?
Av De Haan (Minister):
No indeed, the argument is that from those agreements, and there can be no doubt in my opinion, it follows that the subordinated come after ALL unsecured claims, also the post-bankruptcy interest claims, and what went wrong in the Minister's view, is that the translation of that subordination into the waterfall, as outlined by the experts, is not correct.
Judge Makkink:
Yeah, but a subordination can come in all shapes and sizes. So then it always boils down to interpreting this subordination.
Av De Haan (Minister):
That's right. Yes, yes. Obviously, it would not be a problem for the Minister if the interested party were to take further acts on this specific point.
Judge Makkink:
I understand that.
Av De Haan (Minister):
Then just about the substantive side of that subordination. Look, the key question is, as far as the minister is concerned: does the system of verifying [proofing] claims, which is aimed at realising the legal order of priorites, including the contractual arrangements, stand in the way of this, does it limit what you can agree contractually? I think that's the key question.
Judge Makkink:
But that answer has in fact already been given when assessing the subordination in the Core Tier 1 Securities by the Enterprise Chamber, and that is now before the civil court, which will hear the case on the merits. But in any case, the Enterprise Chamber has ruled that this subordination means that it is only your turn at a time when it is the shareholders' turn, to be very brief.
Av De Haan (Minister):
Exactly.
Judge Makkink:
So the question what you can agree is perhaps not even the most interesting question. The question is: what has been agreed?
Av De Haan (Minister):
Yeah, but what has been agreed, you've been able to read what's been agreed. It has been stated since the petition that is known in the proceedings, that it is a subordination of all, all unsecured claims, and that the post-default interest claims of the unsecured creditors, that these are also unsubordinated claims, is not disputed at all. It is only a question of whether they come before or after those subordinated claims in the winding-up or the bankruptcy. I think that's the crux of the matter. And so the crux of the matter is, that this agreement, that means that the subordinated claims comes after those interest claims, you have to limit them. And make it different because the bankruptcy law contains rules about verification? And of which you yourself have...
Judge Makkink:
You might also think that the background that this subordination is provision is made in the light of insolvency law as establised, well, we have just heard the receiver in the experts' forum, has been conducted in the Netherlands for decades.
Av De Haan (Minister):
I don't know if that's right. Two comments on that. Those provisions do not just say 'in bankruptcy'. It also says 'in liquidation', so that doesn't just mean bankruptcy. And the remark of expert Deterink did surprise me, because he himself says with regard to the Stichting Securities [Core Tier 1], that he does not verify these.
Expert Deterink:
They are equal to shares [but the civil court ruled they are a debt].
Av De Haan (Minister):
Well, then there was also an argument put forward by, uh, just not noted who it was, but I think, very well, by CCP, which said, yes God, uh, that argument of the Minister, which does not relate to how they deal with uh, with preferential claims such as those of the tax authorities. And the argument was yes, they go first, but the interest on those preferential claims, they do not. I would like to say that preferential claims are claims with a priority. And that's just a little bit different from subordination. A right of priority must have a legal basis. And if the legal basis means that a claim takes priority, then that is the case insofar as that legal basis provides the basis for it. And if that legal basis does not provide the basis that interest claims are also preferential, then so be it. But to be honest, it seems quite clear to me that not only the principal preferential claim, but also the corresponding interest claims have priority. In any case, I think that's a nice point of view to plead in a procedure.
Judge Makkink:
Opportunities for the Minister, at least for the tax authorities.
Av De Haan (Minister):
Absolutely. Noted.
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